This study demonstrates that CD8+ T cells in the tumor microenvironment display reduced functionality and hyporesponsiveness. TGF-beta contributed markedly to the tumor-infiltrating CD8+ T cells (TILs) reduced functionality, which could be reversed using a small molecule TGF-beta inhibitor. Upon T-cell receptor (TCR) activation, the activation of ITK and ERK kinases were reduced in CD8+ TILs, as compared to splenic CD8+ T cells: TGF-beta inhibitor could reverse this phenomenon. This study demonstrates for the first time the association of the Spred-1 gene, an inhibitor of the Ras/MAPK pathway, with CD8+ TILs and TGF-beta activity. Spred-1 was upregulated in CD8+ TILs and TGF-beta enhanced the expression of Spred-1 in effector/memory CD8+ T cells and not in rested/memory CD8+ T cells. Based on these findings, the results of this study supports the hypothesis that TGF-beta mediates an inhibitory mechanism on CD8+ TILs involving TCR-signaling blockade and the upregulation of Spred-1, thus implicating Spred-1 as a potential new target for future anti-tumor immune studies. We have demonstrated, for the first time, that murine T regulatory cells (Treg cells) in the tumor microenvironment display both enhanced proliferation and reduced functionality. This enhanced proliferation, combined with decreased apoptosis, leads to an intratumoral accumulation of Treg cells with a unique phenotype: CD4+CD25+FoxP3+GITRhighCD27lowCD62L. The loss of functionality is associated with down-regulation of the TCR signaling complex, including IL-2-inducible T cell kinase. It is also demonstrated that tumor-infiltrating Treg cells have impaired TCR-mediated signaling and calcium influx. Based on these findings, this study supports the hypothesis that (1) tumor-infiltrating Treg cells lose functionality due to their diminished ability to become effectively activated and (2) intratumoral accumulation of Treg cells may compensate for the impaired functionality, thus maintaining immune tolerance to the tumor. IL-2 is well described as a cytokine with two markedly distinct functionalities: as a necessary signal during CD4+ and CD8+ T cell activation/expansion and as an essential cytokine for the maintenance of CD4+CD25+FoxP3+ T cells (regulatory T (Treg) cells) during homeostasis. In this study we demonstrate for the first time that, compared with the use of IL-2 alone, a complex of IL-2 and anti-IL-2 antibody (IL-2 complex) enhances the effectiveness of a viral vaccine in a mouse model with known antigen (Ag) specificity. IL-2 complex led to an increase in the number of Ag-specific effector/memory CD8+ T cells, cytokine production, and CTL lysis following Ag-specific restimulation in a vaccination setting. Our results further demonstrate that this effect is temporary and declines over the course of a few days after the IL-2 complex treatment cycle. Moreover, in contrast to the use of IL-2 alone, IL-2 complex greatly increased the ratio of effector/memory CD8+ T cells to Treg cells. This phenomenon can thus potentially be used in the enhancement of immune responses to vaccination.